Report: UMC shelves China partner income pending review

June 16, 2006 – In an effort to further distance itself from perceived misdealings with Chinese chipmaker He Jian Technology, Taiwanese foundry United Microelectronics Corp. (UMC) says it has placed $100 million worth of shares in its mainland partner into a compulsory trust, and won’t record the money onto its books until it receives government approval, according to chairman and CEO Jackson Hu, quoted by the Taiwan Economic News.

At a June 12 shareholders meeting, Hu said that the $100 million amount, constituting the firm’s 15% ownership in He Jian, represents reimbursement for “administrative assistance,” and not technology transfers as alleged by the Taiwan government, which has slapped UMC with fines amounting to hundreds of thousands of dollars. He also noted that former UMC chairman Robert Tsao and former vice-chair John Hsuan, both targeted as the forces behind the alleged investment in He Jian, no longer work for the company.

Apparently unswayed, the Ministry of Economic Affairs (MOEA) has indicated that putting the income into a compulsory trust actually indicates UMC did, in fact, invest in He Jian, according to the paper.

The mainland chipmaker, founded by former UMC execs, posted net income of about $50 million last year and the year before, and plans an IPO in Singapore in early 2007.


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